Sensitivity of profit to changes in break-even variables
ID:CVSOP
Video Overview
An important tool for any business is break-even analysis as it calculates the number of units that a business needs to produce and sell in order for the business to cover its costs. In other words the level at which total costs are equal to total revenue. Break-even analysis can also be used to calculate how changes to the break-even variables will impact on the profit made by the manufacturing entity. This tutorial considers changes to sales volume, selling price, variable costs, and fixed costs. In order to be able to do this, a brief revision of break-even formula is necessary.
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